Georgia and other States of similar character. I would shave as deep as possible and get, I suppose, in quiet times from ten per cent. to eighteen per cent.; in tight times, from fifteen per cent. to thirty per cent. During the dull months of the year, when my funds could not be so employed, I would loan to New York bankers on call at seven per cent. and take good stocks for collateral. The shaved notes I would call domestic exchange; my call loans, reserved specie funds. * * * My great object would be to deal in domestic exchange." If a borrower could not draw on New York or Charleston, he would cause him to draw on himself, payable in Columbia, and discount the draft at six per cent., and a half per cent. exchange per month. If a crisis came, he would hold out until he was petitioned to suspend and "relieve the community." "I would then close the vaults and refuse to pay the bank's debts, in order to save the people from bankruptcy and ruin, which I had helped to bring upon them."
The Governor of South Carolina, in 1849, recommended the winding up of the Bank of the State, on general grounds of the impolicy of bank currency and of the union of bank and State. He added:
"I also desire, in this place, to express my settled conviction, that the Bank of the State was founded on a false and pernicious principle; that to grant to the members of a community almost exclusively devoted to rural pursuits unusual facilities for commanding money, is to inflict on them and their posterity unmitigated evil; that the more numerous and difficult the obstacles in the way of receiving bank accommodations by that class the greater their contentment and the more certain their success in their vocation."
The banks which suspended, 1857, had to pay monthly at the rate of five per cent. per annum on their circulation. The one which had to pay the most was the Bank of the State, owned entirely by the State, which thus paid a penalty to itself under its own laws. This the Charleston "Courier" thought was very absurd.[1]
The Comptroller, in 1860, blamed Alexander Hamilton for introducing the paper system. He thought that the banking system of that State was founded on a much more stable basis than the credit system of the North. Of the latter he said: "As soon as the Southern prop is removed, it is doomed inevitably to topple to the earth." This is what comes of accustoming people to hear all the time what Hezekiah Niles used to call "high pressure" statements.
The Governor was ordered, by the act of September 15, 1868, to take all the assets of the Bank of the State of South Carolina, which had long been closed, and sell them and deposit the proceeds in the treasury. This act was held void, as impairing the obligation of contract. The State was a stockholder and had no right to sieze the assets, which must be held for the creditors.[2] In Dabney vs. the Bank of the State of South Carolina,[3] the Court quoted the report of an investigating committee of the Legislature
